(EnergyAsia, August 22 2017, Tuesday) — China’s crude oil production is on course to decline for the second consecutive year after registering a higher-than-expected fall of 5.1% in the first half of 2017 over the same period of 2016.


According to China’s National Bureau of Statistics (NBS), the country produced 96.45 million tons (3.917 million b/d) in the first half of 2017, down from 101.63 million tons (4.12 million b/d) previously.

The official data confirmed the decline in China’s upstream sector underlined by BP’s latest annual statistical review released in June.

According to BP, China’s crude oil production plunged by 7.2% from 4.31 million b/d in 2015 to just under four million b/d last year. This was the lowest level of output since 2009 when Chinese oil firms pumped out a little over 3.8 million b/d.

With the continued weak outlook on oil prices, analysts do not expect China’s domestic production to recover in the near term. They point to the depletion of the country’s two major oil fields in Daqing and Shengli, and the disappointing performances of the country’s emerging shale and offshore sectors.

The continuing weak outlook for oil prices has led to cutbacks in the exploration and production budgets at both Chinese and foreign companies operating in the country.

UK consulting firm Wood Mackenzie expects Chinese oil production to slide further to reach between 3.5 and 3.6 million b/d by 2020. China alone will account for around half of Asia’s one million b/d production decline between 2016 and 2020.

“We don’t see any large greenfield oil developments coming stream by 2020. As such, given the maturity and age of the main oil fields within the country, such as Daqing and Shengli, we forecast an ongoing decline in output,” said Angus Rodger, Wood Mackenzie’s upstream research director.

“The main factor that would change this outlook is if current government strategy changed and Beijing sought to push the big state oil companies into increasing or restarting production from marginal fields.”

Mr Rodger’s bearish outlook contradicts Beijing’s official forecast for the country’s oil production to recover to surge past four million b/d by 2020.